Beginning in 2014, virtually all of us will be required to have a government-approved health insurance plan, or face a tax penalty. Because costs are expected to jump dramatically for many, it is important to take advantage of every opportunity to keep more money in your pocket. Here’s what you should know now about HSA's and Obamacare.
Health Insurance Requirements Starting in 2014
Next January, major components of the (so-called) Affordable Care Act go into effect. The IRS will be in charge of enforcing tax penalties if you decide not to carry health insurance.
Plans will be given a rating of Bronze, Silver, Gold, or Platinum, based on how much they cover. If you do not have coverage now, or if the effective date of your current plan is later than March 23, 2010, you will be required to get a new plan.
So, unlike what you may have heard, many people will not be able to keep their current plan, even if they like it. If the effective date of your policy is prior to that date, then you have a “grandfathered” plan. If your insurance company decides to continue offering that plan, you may keep it. Some may unfortunately discontinue offering grandfathered plans.
Rates Are Going up in 2014
The insurance carriers will be determining 2014 rates soon, but none have been released yet. Because there will be no more underwriting on health insurance plans, I expect premiums to jump substantially. The median estimates from the quoted experts seem to be 30% - 70% rate increases on average.
Because young people are being asked to subsidize older people under the pricing structure required by law, rates on young people may rise by 100% or more. People under age 30 will have an option to purchase a “catastrophic” plan, which will hopefully lower premiums some.
Should You Keep Your Grandfathered Plan?
There is no easy answer to this. Some older plans have had major rate increases over the past few years, and you can get a new plan with preventive care included for less money. If you haven’t spoken with your Advisor about your coverage recently and your rates have been going up, you may want to give us a call.
That said, if your rates on your grandfathered plan have not gone up too much, I would consider keeping it. The new HSA plans will be accepting all applicants regardless of pre-existing conditions, which may result in larger-than-expected claims and faster rate increases.
HSA Plans Are Still the Best Option
There was great concern that HSA-qualified plans with high deductibles would not satisfy the requirements under Obamacare to qualify as a Bronze plan. The good news is that these consumer-driven plans will continue to be available, and probably with the same deductible range as is available today.No plans will be less expensive than HSA plans. The Bronze-level HSA plans are likely to be substantially less expensive than the higher-level plans. And, remember that maximizing your HSA contribution will also help you minimize your taxes, and put cash in an account that you can use to pay for dental, eyeglasses, and other medical expenses with tax-free dollars.
Wanted, Dead or Alive
In the coming months, I’ll continue to explain what is happening with the full implementation of the Obamacare (healthcare) reform law, and how it affects those of us who have (or want to have) individual or family insurance plans. And, I’ll share my thoughts and advice. If you are even more interested in the public policy and the social ramifications, follow my Health Care Reform blog.
This is Wiley IV and me, looking mean in front of our Top Ten Wanted poster. (You know, the FBI doesn’t want me sharing all this insider information.)
If you currently have coverage with us, then we will be in communication, and let you know your best options and how to take advantage of subsidized premiums (if you qualify) as we get closer to 2014.
To your health and wealth!
P.S. - If you ever go to a non-approved medical practitioner where your government-approved insurance doesn’t work, it’s nice to have some money in your HSA. I kind of think of my HSA as a “health freedom fund.”
P.P.S. - Next month, I’ll talk some more about how the subsidies work, and how you can keep more money in your pocket, including HRAs.